14 Oct 2008

Mitsubishi buys stake in US bank

7:08 am on 14 October 2008

Japanese banking giant Mitsubishi UFJ has completed a $US9 billion deal to buy a 21% stake in Morgan Stanley.

The BBC reports the deal provides much needed financing for the battered Wall Street bank.

Mitsubishi was able to secure more favourable terms for the deal after Morgan Stanley shares plunged along with the rest of the banking sector.

Mitsubishi will receive preferred stock that carries a 10% dividend.

The original deal involved both common stock and preferred shares.

Shares in Morgan Stanley soared 48.4% to $US14.37 in early trading on Monday.

However, rating agency Moody's has repeated a warning that it might lower its main debt ratings for Morgan Stanley. It said an extended downturn in global capital markets would hurt the company's revenue and profits in 2009.

US federal authorities approved the deal a week ago.